In the Budget 2018, Finance Minister Arun Jaitley cut excised duty on petrol and diesel by Rs 2 per litre and additional excise duty by Rs 6 per litre, but it still did not bring down the fuel prices in the country as it was balanced by the levy of a road and infrastructure cess of Rs 8 per litre.

Later, Arun Jaitley explained it was done ensure that more funds flow into central government’s coffers as it was taking a hit post the implementation of the GST. The step was taken as 40% of total excise duty is devolved to states, while cess is a specific duty collected entirely by the central government for a specific purpose.

According to ICRA, this road and infrastructure cess, estimated at Rs 1,13,000 crore, would flow into Central Road and Infrastructure Fund (CIRF). Explaining further Shubham Jain, Vice-President, ICRA Corporate Ratings said that in the event of crude prices moving up, there could be limited headroom for the government to further increase the road and infrastructure cess, leading to insufficient funds for national highways. Read More…